Some of the largest and most risk-averse asset managers, including the likes of pension funds and endowments, are now looking at crypto as an asset class, according to research released Thursday by trading platform eToro.
The eToro-commissioned market research, which quizzed 25 big institutions in Q3 2020 about investing in crypto, comes on the heels of news that BlackRock, the largest asset manager on the planet, is dipping its toe into bitcoin futures.
“The respondents included endowments and pension funds,” said Spencer Mindlin, an analyst at Aite Group who carried out the research. “Funds and asset managers made up a proportion and some of the banks have asset management divisions and we spoke with a couple of folks there too.”
The overarching response from participants (a split among banks, brokers, fund managers and custodians) was that the crypto market has matured towards being institutional-grade over the previous two years, and the time was right to get involved.
“People are recognizing that where it took other markets, say, 10 years to mature, the crypto market has taken two years to reach levels of liquidity that we see in other asset classes,” Mindlin said in an interview.
Regulated markets were the preferred execution venue of the respondents, followed by over-the-counter (OTC) market makers and crypto spot exchanges. Unsurprisingly, the possible launch of regulated funds and exchange-traded fund (ETF) products were stated as guaranteeing institutional growth.
The invitation to institutions looking at digital assets was further extended last week by news the U.S. Office of the Comptroller of the Currency (OCC) had granted crypto custodian Anchorage a national trust charter to become a “digital bank.”
Enlisting the help of digital asset custody specialists was also a priority, the research found, with the concept of so-called hot wallets (storage media connected to the internet for any significant length of time) generally viewed as inappropriate for the institutional market.